The US Securities and Exchange Commission (SEC) approved the  derivatives risk management rule which is designed to provide a  comprehensive approach to the regulation of funds’ use of derivatives    The new rule 18f-4, permits mutual funds (other than money market  funds), exchange-traded funds (“ETFs”), registered closed-end funds, and  business development companies (collectively, “funds”) to enter into  derivatives transactions.  The SEC amended rule 6c-11 “the ETF rule”  to  allow leveraged or inverse ETFs to operate without obtaining an  exemptive order.

Kevin Gustafson, general counsel and CCO and Graham Day, head of  product & strategy at Innovator ETFs discuss the background to the  rule, what the rule means and how it will impact ETF issuers and  investors.